Bad loans mess: Public sector banks' NPAs soar 1.5 times to Rs 6.89 lakh crore over two years

By Bhasker Tripathi

New Delhi:  Indian public sector banks’ (PSB) bad loans soared 1.5 times, from Rs 2.67 lakh crore ($39.99 billion) on 31 March, 2015, to Rs 6.89 lakh crore ($103.21 billion) – an amount that could electrify half of India’s households – on 30 June, 2017, according to this reply to the Lok Sabha  (lower house of parliament) by Shiv Pratap Shukla, minister of state for finance, on 6 April, 2018.

Of the 21 public sector banks, 11 had non-performing assets (NPAs) greater than 15 percent of total assets, as per data cited by the minister. In light of the Rs 11,000 crore fraud at Punjab National Bank, the Reserve Bank of India (RBI) has placed all 11 under scrutiny, The Financial Express reported on 9 April, 2018. Five more PSBs are expected to join the ranks. Demands that PSBs be privatised have also been reinvigorated since the fraud was unearthed in February this year.

Representational image. Reuters

Representational image. Reuters

Among other corrective action, the RBI will restrict their lending activities, opening up of new branches and recruitment.

Indian companies and individuals owed Rs 4.1 lakh crore ($61.41 billion) to PSBs in overdue loans in the “non-priority sector”–mainly corporate lending, car loans, personal finance, credit card dues and home loans–as of March 2016. These NPAs, if fully recovered, would suffice to pay off distressed farm loans across eight states, with a third (32 percent) still left over, IndiaSpend had reported on 31 July, 2017.

In the decade to 2016, bad loans in the non-priority sector rose more than 22-fold (2166 percent) from when they were valued at Rs 18,300 crore in 2006, the report said. During the same period, the sector’s share in public sector banks’ NPAs rose from 44.2 % to 76.7%. This growth was particularly pronounced after 2011, when it became 12-fold (1110 percent) over five years.

NPA Ratio Of Public Sector Banks
Public Sector Banks NPA Ratio (In %) Put Under Prompt Corrective Actions By RBI
Allahabad Bank 15.46 Yes
Andhra Bank 14.26 Expected to be
Bank of Baroda 13.22 No
Bank of India 15.49 Yes
Bank of Maharashtra 19.05 Yes
Canara Bank 10.58 Expected to be
Central Bank of India 18.08 Yes
Corporation Bank 15.92 Yes
Dena Bank 19.56 Yes
IDBI Bank Limited 24 Yes
IndianBank 6.4 No
Indian Overseas Bank 22.74 Yes
Oriental Bank of Commerce 16.95 Yes
Punjab & Sind Bank 10.95 Expected to be
Punjab National Bank 12.88 Expected to be
State Bank of India 11.8 No
Syndicate Bank 10.91 No
UCO Bank 23.29 Yes
Union Bank of India 13.54 Expected to be
United Bank of India 20.1 Yes
VijayaBank 6.17 No

Data sourced from Lok Sabha and Financial Express; Data as of 31 December, 2017(Note: The numbers related to electrification are arrived at by multiplying Rs 3,000 per household, the amount the central government is providing for electrification under the Saubhagya scheme, with the overall number of households in the country.)


Updated Date: May 14, 2018 11:19 AM